Thursday’s trading session was marked by noticeable swings in the stock market, largely influenced by Nvidia Corporation’s notable impact on semiconductor stocks, and the impending expiration of a massive number of options contracts.
This event, commonly referred to as “triple witching,” will see the simultaneous expiration of stock index futures, stock index options, and stock options this Friday. With an estimated $5.5 trillion at stake according to insights from SpotGamma, an options analytics platform, this occurrence can significantly increase market liquidity as traders reposition their investment portfolios.
Market participants are keeping a close eye on Nvidia Corporation (NVDA), where there’s been an uptick in the trading of bearish options just before these contracts expire. FactSet data shows considerable activity in the trading of Nvidia put options, with the $135 and $130 strike prices drawing 365,000 and 250,000 contracts respectively. This rush towards put options has resulted in Nvidia’s put-to-call ratio climbing to 0.70 from 0.58 within a week.
From a technical analysis perspective, Nvidia’s shares made an impressive leap over $140 on Thursday morning, which is more than twice their 200-day moving average—a development not seen since 2024, per the Dow Jones Market Data. While crossing this threshold has sometimes suggested a forthcoming dip in stock prices, historical data indicates a recovery with Nvidia’s shares climbing in the following month 62.3% of the time.
Raymond James’ technical analyst, David Cox, pointed out a “bearish engulfing” pattern on Nvidia’s chart for Thursday. This technical occurrence could hint at a possible retreat in stock prices after they have ticked upwards consistently for some time.
With the imminent expiration set to be the largest in history, Nvidia’s options are under the microscope as market participants gird themselves for the likely impact on market turbulence.
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